WASHINGTON -- Home prices fell in January for a fifth straight month in most major U.S. cities, as modest sales increases have yet to boost prices.
The Standard & Poor's/Case-Shiller home-price index released Tuesday showed that prices dropped in January from December in 16 of 19 cities tracked.
The steepest declines were in San Francisco, Atlanta and Portland. Prices increased in Miami, Phoenix and Washington. Price information for Charlotte was delayed and therefore not included in the report.
The declines partly reflect typical offseason sales. The month-over-month data are not adjusted for seasonal factors.
Still, prices fell in 17 of the 20 cities in January compared to the same month in 2011. The group's nationwide index of prices has fallen 34 percent since the housing bust and is now at 2002 levels.
The continued drop in prices suggests the housing market remains weak, even after the best winter for home sales in five years and steady improvement in the job market.
"Despite some positive economic signs, home prices continued to drop," said David M. Blitzer, chairman of S&P's index committee.
Eight cities – Atlanta, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa, Fla. – are now back at 2000 levels or earlier. Only Denver, Detroit and Phoenix posted year-over-year increases.
Analysts were quick to note that prices are expected to rise modestly throughout much of 2012.
"It's going to be tempting to look at home price declines and see a still-faltering housing recovery, but that's just not the case," said Stan Humphries, chief economist for housing website Zillow.com. "The reality is that home prices and home sales will be moving" higher.
The Case-Shiller monthly index covers half of all U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The January data are the latest available.
Some economists say sales increases could stop prices from falling further by early spring. Home prices tend to follow sales by about six months. When sales rise, prices rise, too, and an increase in prices would likely create a positive cycle.
Homes are the most affordable they've been in decades. And mortgage rates are just above record lows.
The job market is also getting stronger. The economy has added an average of 245,000 jobs per month from December through February. The unemployment rate has fallen to 8.3 percent, the lowest in three years.
Conditions are improving for those in position to buy a home. Still, many people can't afford to buy or are unable to qualify for mortgage. Some people in position to buy are holding off, worried that prices could fall even further.
The biggest reason why prices are still falling is foreclosures, which are still high across the country. Foreclosures and short sales – when a lender accepts less for a home than what is owed on a mortgage – are selling at an average discount of 20 percent.
Foreclosure activity surged in February across half of U.S. states. The pace of foreclosures is increasing after all 50 U.S. states reached a $25 billion settlement last month with the nation's five biggest mortgage lenders over foreclosure abuses. Many foreclosures had been stuck in limbo as the 16-month government investigation into foreclosure paperwork problems dragged on.